VA Loan Live Hangout, Oct. 17, 2013

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Sam: Hi guys, welcome to this edition of VA Loan Live. I’m Samantha Reeves, our senior real estate and home buying writer. I’m joined by Chris Birk. Chris, welcome.

Chris: Hi Sam. How are you?

Sam: Doing great. Chris is the author of the book on VA loans. So he’s a real expert on this topic. We’re also joined by Bill Bales. Bill, welcome.

Bill: Thank you.

Sam: Bill is a loan officer here with Veterans United. Today we’ve got lots of questions that we want to get to so we’re just going to jump right in. The first one we received on Facebook from Sergio, and he wants to know is a VA loan guaranteed even if you don’t have good credit? Bill, can you talk about that?

Bill: Sure. The VA loans are guaranteed once you qualify for the loan so they certainly are.

Sam: Excellent. OK. Chris, Marvin asked, “My credit is bad and I want to buy a home. How can I get a VA loan?

Chris: As far as credit is concerned, we’ll step back a bit and address Sergio’s question too in a little bit more detail. Bill’s absolutely right in terms of the loans being guaranteed, but that word does tend to cause a lot of confusion among veterans and service members. It’s guaranteed in the sense that the Department of Veterans Affairs basically insures loans. It doesn’t make home loans. It basically insures them and so it’s a financial guarantee. It’s not a guarantee that if you have acceptable eligibility you are promised absolutely 100% to get a home loan. You’re still going to have to meet requirements that are set by both the VA and by VA approved lenders.

As far as credit goes right now, if you call Bill today, you’re typically going to need, and not just right here at Veterans United but in most VA lenders across the country, you’re generally going to need at least a 620 credit score in order to move forward. If that might be a hurdle and in the grand scheme of credit scores, I mean I know you both know credit way more than I do, but in the grand scheme of credit scores it’s really a pretty low score all things considered when you’re looking at conventional financing or even FHA financing. A 620 is a pretty incredible benefit of this program. It still can be tough especially if you’re out there serving our country, credit’s not really on top of mind.

If that might be a problem, you call Bill today, you’re not quite able to get pre-qualified. We have an incredible program here at Veterans United. It’s called the Lighthouse Program. It’s staffed with credit experts. They spend day in day out working with veterans, give them the information that they need to develop a plan to repair their scores and get on the road hopefully to loan pre-qualification. It’s an incredible program. I definitely urge you to check it out. It’s called the Lighthouse Program here at Veterans United.

Sam: Okay, and now if you’d like to get in touch with our Lighthouse Program, you can contact them at 888-392-7421 or at veteransunited.com/lighthouse.

This is just a reminder, if you’re watching us live on YouTube or on our live channel, you can ask us your questions. You can go to vu.com/valoanlive, type in your question there and we’ll get it in an email. Just send it our way, we’d love to answer your questions.

Bill, this next one comes from John. He says, “How can you get a loan when someone stole your identity and your credit is now bad because of it?”

Bill: That’s a difficult situation that you’ve got into. Somebody stole your ID. It does present some issues. The first thing to really do is to give us a call, let me walk through and take a look, we’ll take the pre-qualification. Go ahead and look at your credit and your credit scores. We can walk through that together, kind of see exactly where you’re at in the process. Then if we need to, then we can certainly go to the Lighthouse and they can help us with your situation on how to correct and repair some of those items that may have been damaged through the theft of your identification. Again, best thing to do is pick up the phone, get the process started and then we can just walk through it step by step.

Sam: Excellent, thank you.

Chris: Someone’s going to ask you, identity theft is so incredibly common, especially among military members who often find themselves prey to financial scammers. That’s why it’s so important to spend time looking at your credit report as early you can. As soon as you have an inkling that you might be looking to purchase or refinance. Annualcreditreport.com, you can go there and get a free copy of your credit report. One from each of the three bureaus over the course of a year so you can actually space it out and get one copy every quarter just to make sure you’re staying on track of your financial profile.

Get it, look immediately for errors, for mistakes, for misreportings, for accounts that aren’t yours. About 25 percent of all credit reports have an error that’s serious enough to derail something like a loan. It’s incredibly prevalent and most people don’t know it so spend the time to look at your report. What that report won’t have is your credit score and that, at the end of the day is going to be most important for lenders and that’s why you’re still going to have to pick up the phone or go online and send Bill an email. He’ll be able to let you know exactly where you stand credit-wise.

Bill: Of course.

Sam: Bill, what is your contact information?

Bill: I’ll give you my 800 number: 800-814-1103. My extension is 4316 so feel free to give me a call.

Chris, to address that one question about going through the credit report. I have a lot of people ask me,  “What’s the best way to get started in this process and when should I start?” One of the things I always recommend is getting started early, just in case there are issues with your credit report. We can get some of those ironed out ahead of the ball game. It’s always good kind of get the early start. Find out exactly where you’re at. In that way you can start working on repair and it gets you to where you can be pre-qualified if there are any issues with your credit.

Sam: Excellent, and Bill what’s your email address?

Bill: It’s bill.bales@vu.com.

Sam: Excellent, thank you. This next question comes from Amanda and she wants to know, “How can we qualify for a VA loan with BAH income? We’re finding lenders are not accepting it as income considered.” Bill, do you want to go ahead and talk about that?

Bill: Sure. That’s a great question. BAH or Basic Allowance for Housing, we can utilize that as income. Actually it’s non-taxable income so we can certainly utilize that along with regular base pay income and BAS income as well. We can certainly utilize that as long as that’s going to continue in this current situation that you’re in for at least the 12 months after closing.

Chris: I’m not sure of any of the situation here is that different forms of BAH in terms of being active in the military and then housing allowance that you can get through your GI benefits. If this is educational income, if these are education benefits, that is a different story unfortunately. As far as education income goes, that’s not something that lenders will look at and consider as stable or reliable income that’s likely to continue. That is not just Veterans  United or VA, that’s conventional, FHA, USDA, any types of mortgage; educational income just isn’t going to meet the needs of lenders out there.

Bill: Good point.

Sam: Excellent. Thank you Chris. This next one comes from Extraordinary. They want to know, “What is the waiting period for short sale or deed-in-lieu or foreclosure?” Chris, do you want to talk about some requirements there?

Chris: Yeah absolutely. It’s typically a 2 year wait from the foreclosure date. There are circumstances and it can change depending on the loan program. There are actually just recent changes to FHA if that’s something you’re considering but generally for a VA loan you’re looking at a 2 year wait from a deed-in-lieu or short sale. Same is generally true for bankruptcy of chapter 7 you’re going to look at a 2 year waiting period or seasoning period as you might hear it called from the date of discharge. There are some wrinkles with the Chapter 13 bankruptcy  you might be eligible within a year of that filing date.

If you’ve been through anything catastrophic like this, know at the outset that some of what you’re hearing or reading online is absolutely untrue. You can still use this home loan program even if you had a foreclosure on a VA loan. It’s really going to be a matter more so of your credit and your overall entitlement and that’s something that Bill can go over with you. Now if you’re halfway through or just partly through one of these awful events, you’re going to need to spend time working on your credit and getting your profile in order and that’s something that both  Bill and one of our Lighthouse experts can definitely help you with.

Sam: Yeah. If you guys want to get a copy of Chris’ book, you can get a free copy at veteransunited.com. Then you’ll just look for book or just do slash book. You can ask for a free copy, we also have some really great guides on there with information that will talk you through several different processes.

Bill: Chris’ point earlier on short sales. If you’ve had one and you’ve already gone through that process I would say go ahead and give me a call, let me walk you through that because there have been some changes just recently with regards to short sales. I’d be glad to help answer any questions or see if the seasoning period may be a little shorter for you as well.

Sam: Excellent, thank you. This next question comes from Camilla. She wants to know, “How can you help me get started with the process if I’m currently overseas?” So I’m going to guess Camilla is on deployment or for some reason she’s not in the States. What can you do?

Bill: That’s a great question. I can certainly help with that. If we are unable to communicate via the phone, we certainly can operate through email. I can get you all the information that we need for the pre-approval through the email system and get your information back and even go through the entire process overseas via email and using electronic signatures now. We can operate on your time frame and when it’s convenient for you to be able to answer and reply back emails or we can arrange for a phone call at any time that’s convenient with the active duty personnel. Absolutely.

Chris: It’s incredible. We have people closed all the time who are deployed and they come home from deployment and they are first time home owners. It’s incredible. Please don’t let deployment or if you have a contract overseas. That does not necessarily mean that you’re going to have to wait until you’re back on home soil before you are able to move forward on purchase.

Sam: Absolutely. Chris can you maybe talk bout, a veteran has entitlement. So they can get a VA loan assuming they meet certain requirements. Does that mean that they can get a loan in any amount? What’s the process of figuring out how much you qualify for?

Chris: It’s really going to be based on your specific situation, your unique circumstances. But really what we’re talking about is your debts and your income for the most part. That’s what lenders and the VA are both really concerned with in terms of determining what sort of amount you might be able to handle from a financial responsibility and a risk standpoint. It’s really a question of what you can afford.

If you have full VA entitlement, if you’ve never used this program before and you qualify in most parts of the country, you can borrow up to $417,000 without putting down a single dollar as a down payment. It doesn’t mean that you get $417,000 and lenders cross their fingers that you can make those payments. Your loam amount is going to be based in part on what you can afford. VA really more than any other program on the market, does an incredible job of making sure that borrowers get into homes and into properties and in situations that they can afford.

VA loans on the last 5 years have had the lowest foreclosure rate. Really not quite over the last 5 years, just this last quarter prime loans passed them, but for almost all of the last 5 years. A loan program where 90 percent of people don’t put a single dollar down has had the lowest foreclosure rate out there. VA and VA lenders do a great job of not putting you in a position where you’re set up to fail, it’s more about what you can afford, what makes the most sense for you and your goals long term.

That’s going to be linked to you. Your monthly debts, your monthly income, how much money you have leftover at the end of the month to meet VA’s unique residual requirement. It’s so specific and subjective it changes from person to person, so touch base with Bill, give him an overview of where you are and where you want to be and he’ll let you know. You’ll have a pretty clear sense of the outset, what type of purchasing power you might be dealing with.

Sam: Like Chris said, give Bill a call. Bill do you want to tell me your phone number one more time?

Bill: Sure, it’s 800-814-1103. My extension to my office is 4316.

Sam: Excellent, thank you. And this is just a reminder. You are watching VA Loan Live. If you’d like to ask your questions live  then feel free to reach out to us at vu.com/valoanlive. Yes, that’s right.

Our next question comes from Richard. He’s got kind of a two-part question. The first one is, “Can a vet who’s on social security get a loan?” Do you want to talk about different types of income and what you can or can’t use?

Bill: Sure, now with social security we can certainly use that as income. Whether that’s social security disability income, or just regular social security after retirement. Absolutely we can utilize that as monthly income for you as well. Providing that we qualify you and we walk through all the steps and you have your entitlement, it certainly can be qualified as income, absolutely.

Sam: Excellent. Chris, the second part of Richard’s question is, can he get a mobile home using his VA loan? And if so, how much will he have to put down?

Bill: Yes and no is the answer to that question. Unfortunately like a lot of questions in life doesn’t give you something that’s satisfactory. Yes you can use this benefit to purchase a mobile home. It’s absolutely part of the program. The issue that you will find is that there are not a lot of VA lenders out there willing to loan money for a manufactured home. They are inherently risky properties and it’s not something that a lot of lenders are commonly doing these days. That said there are still lenders out there.

Send me an email, it’s chris@vu.com. I have a list of lenders that at least used to do these types of loans. I’m not sure if they still are, but it’s certainly a place to start. At the end of the day you may have to end up going through a manufacturer of these properties to make this work.

Sam: Excellent thank you. Chris what’s your email address?

Chris: It’s just chris@vu.com.

Sam: Excellent. You can also reach me at samantha@vu.com. Bill, one more time with yours?

Bill: I’m at bill.bales@vu.com.

Sam: Excellent. Thank you. Our next question comes from our VA Loan Live page. This one’s from Steven. He says, “Chris, my father served more than 20 years in the United States Air Force. He’s deceased, can I use his VA home loan?”

Chris: First of all thank you for your father’s service. It’s greatly appreciated. I’m sorry for your loss. I’m also sorry to say that this is not a benefit that extends to military dependents so unfortunately no you would not be able to utilize his home loan benefit.

Sam: All right. This next one is also from our VA Loan’s Live page. This one is from George. Bill, George wants to know, “How has the government shut down affected service members applying for VA loans?”

Bill: You know, we were very lucky as we went through this process. Here at Veterans United we were able to come up with ways to work around some of the issues that the government was having during the shutdown process. So really we kind of continued on as if nothing had really changed. Again things went along very smoothly and we were able to overcome some of the difficulties there. Like I said I don’t think we missed a beat really, for [crosstalk 00:15:39].

Chris: No, so far as I know I don’t think we had closings that were really affected. Just so we’re clear, depending on when you’re watching us. If you’re watching us live on Thursday at 12 Central, the shutdown is over. It ended early this morning actually, so the VA home loan program is built so it can operate as normal during the shutdown. VA disability benefits, compensation, everything else that was possibly in jeopardy towards the end of the month, no longer an issue. This program operates as normal, the shutdown is over, so if that was a concern that was keeping you from pursuing your benefits, please don’t let it be anymore.

Sam: Excellent. And our last question comes from Cathy. Chris, Cathy says, “My late spouse was declared a 100% disabled in 2011. As his widow, do I qualify for a VA loan with no money down?”

Chris: First, I am sorry for your loss and thank you for his service. Yes, you may. It’s hard to say for sure without more information. This benefit does extend to some surviving spouses. Generally your spouse needs to have died in the line of duty or as a result of a service-connected disability, and there’s actually one more requirement that was added recently. It depends on lenders and who recognizes what but you also might be eligible if your spouse didn’t die of a service-connected disability but suffered from one for at least the last decade before his or her life. I know it’s a lot of different requirements and some jargon out there so give Bill a call, send him an email. He’ll be able to let you know pretty quickly what might be possible. At least ultimately you’re going to have to go to the VA, you’ll seek entitlement and eligibility. There’s slightly different form and format. But the VA does about 1000 to 1500 of these loans every year for surviving spouses so it is a possibility.

Sam: Excellent, thank you. Folks, if you’d like to watch any of our older videos, you can also view those at vu.com/valoanlive and feel free to send us your questions at any point in time and we will get to them. We’ll do our best to get to all of them during our live hangouts. Thank you for joining us, Bill.

Bill: Well, thank you.

Sam: You can give Bill a call. What’s your phone number?

Bill: It’s 800-814-1103. My extension is 4316. Please do call. That’s the hardest thing to do is just pick up the phone and get you started on the process.

Sam: Chris, thank you for joining us as well.

Chris: Thank you Sam, as always.

Sam: We’ll see you guys next week.